Catalyzing Growth: Strategy to Boost Adoption on Radix by Utilizing the Stablecoin Reserve | The Radix Blog

Radix already provides a top-tier developer experience (DevX) and user experience (UX) through its asset-oriented framework, alongside the sole viable route to Hyperscale in the sector. However, to fully unlock its capabilities, we need to rapidly increase the number of users, liquidity, XRD holders, and capital.

The proposed campaign is not a mere airdrop of free tokens but a strategic investment aimed at cultivating long-term network effects within Radix. By creating genuine on-chain activity and liquidity, users and developers will experience Radix’s unparalleled speed, security, and usability—ensuring they do not revert to slower, overloaded alternatives.

The Foundation believes that the quickest and most impactful way to catalyze ecosystem growth is to directly engage users with the reserve, who will actively contribute to the success of Radix.

The rationale is straightforward:

1. Immediate Network Effects: Each new liquidity provider, trader, and staker enhances the efficiency and usability of Radix’s infrastructure. Increased capital within the ecosystem attracts more developers and institutions.
2. Higher TVL = Greater Credibility: Total value locked (TVL) is a critical success indicator in DeFi. An increase in TVL results in more liquidity for decentralized applications (dApps), narrower spreads for traders, and a sturdier foundation for lending protocols and other financial instruments.
3. Drive Demand for XRD and Reward Actively Engaged Users: Distributing tokens to active participants connects ecosystem involvement with incentives. By encouraging users to hold or stake XRD and linking rewards to active engagement with assets and capital, demand for XRD will rise naturally. This strategy promotes sustained on-chain activity through meaningful participation, diverging from traditional liquidity mining or basic airdrop campaigns.
4. Competing with Other Layer 1s: The crypto environment is highly competitive, with Layer 1 projects incentivizing liquidity migration aggressively. Radix has the technological advantage but requires robust incentives to encourage both onboarding and sustained use.
5. A Self-Sustaining Cycle: Once users shift to Radix, the growth of liquidity and real developer engagement will allow the platform to gain momentum, driving continued expansion long after the incentives are distributed.
6. Distribution Metrics: The stablecoin reserve plays a notable role in our tokenomics, yet new users might not understand its intended function, leading to potential drawbacks. Distributing this reserve in any format enhances tokenomics and the overall perception of Radix.

Instead of a one-off distribution that attracts only short-term farmers, the incentive campaign should be structured into progressive seasons based on points, rewarding sustained interaction over time:

1. Season 0 (Retroactive Rewards): Users who have engaged with the ecosystem since the Babylon launch will receive initial rewards as acknowledgment for their early participation. Season 0 is planned to conclude around June 2025. Following this, multiple seasons are to occur over a minimum of 18-24 months, with each season’s duration hinging on its primary objectives. Each subsequent season will offer substantial incentives for holding or reinvesting rewards earned in previous seasons, including from Season 0.
2. Ongoing Seasons: Participants can earn points based on tangible activities such as holding or staking XRD, providing liquidity for stable assets, trading volume on whitelisted assets, engaging in decentralized exchange (DEX) swaps, and lending or borrowing through approved assets. Additional points may be acquired through NFT activities, holding and minting tokens, and engaging with specific dApps through initial usage, repeat transactions, and cross-dApp interactions. This strategy ensures deep and sustained participation within the ecosystem beyond passive holding.
3. Tapered Rewards: Rewards per season will gradually decline, facilitating a smooth transition from incentivized growth to organic adoption.

A brief note on farmers: By distributing points across a range of activities that incentivize longer account activity, enforcing XRD minimums, and considering that transactions for rewards incur a fee, we can mitigate the risk of low-quality farming, as a larger number of wallets will need to demonstrate net contributions over time.

For an incentive campaign to succeed in the current market, it must be substantial enough to attract long-term users and capital—small-scale campaigns fail to provide a return on investment. The recent Sonic airdrop utilized around 6% of its supply, resulting in a notable increase in both TVL and market cap rankings.

For Radix, this would necessitate a minimum allocation of 650 million XRD. However, considering the variance in USD value compared to Sonic, we propose allocating 1 billion XRD to ensure comparable outcomes.

Utilizing all Foundation reserves for this would significantly drain the treasury, restricting resources vital for future development, marketing, and ecosystem support.

Previously, Radix set aside 2.4 billion XRD as a locked reserve for a future stablecoin initiative. Given the considerable changes in the market environment since then, this reserve is unlikely to serve its original purpose moving forward.

The Foundation seeks to reallocate this reserve to foster growth essential for the network and its ecosystem’s success. This strategy would encompass three proposed adjustments to the tokenomics:

1. About 1 billion XRD from the stablecoin reserve will be directed towards incentive campaigns that will span 18-24 months, heavily rewarding holding or potentially vesting previously earned rewards.
2. To offset the resulting increase in circulating supply, the existing network emission period will be shortened. We aim to cut the emissions timeline from 40 years to 20 years, which will subsequently decrease the maximum supply of XRD by around 6 billion. This also optimizes the perceived fully diluted value (FDV) as reflected on aggregation sites.
3. Establishment of a 1 billion XRD Growth Fund: While the Foundation’s operational treasury is currently stable for ongoing activities (like protocol development and marketing), we must secure capabilities to address costly growth elements in the ecosystem, such as Tier 1 exchanges, collaborations, liquidity provisions, and external investments from venture capitalists.
4. The remaining 400 million XRD will be retained for future incentives, the growth fund, or potential burning.

As market conditions improve, we will continuously reevaluate these proposals. Our long-term objective focuses on supply reduction, so burning XRD created from the new Growth Fund is preferable based on criteria to be defined later. Any remaining XRD from the incentive allocation will also be burned when the campaign concludes, should it not be extended.

The foundational technological framework of Radix is unparalleled. To shift market trends, the Foundation’s foremost priority must be to enhance demand for XRD and position Radix as the leading ecosystem for DeFi creators, traders, and liquidity providers.

After an exhaustive analysis of possibilities, the most promising strategy arises from a strategic yet extensive distribution of XRD, complementing Radix’s advanced technology, user experience, developer experience, and a roadmap to Hyperscale that will elevate Radix as a premier crypto center.

The alternative is to remain passive with the 2.4 billion XRD while competitors attract users and dominate liquidity or to discard it while hoping for fleeting attention. We believe the path is clear—redirect this reserve to make Radix the foundation for the next generation of DeFi.

Considering the breadth of this proposal, community feedback is encouraged at this preliminary planning phase. We invite you to share your perspectives in the relevant discussion threads.

We are keen to obtain insights from the ecosystem as specifics regarding the incentive structure, eligibility, and distribution processes are established. If you wish to engage in initial focus group discussions, please apply using the relevant form.

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